Fonds - Compliance

Most of these obligations seem so important to the legislator that it even sanctions their violation as an administrative offence with a fine of up to EUR 1 million, in some cases even up to EUR 5 million. 

The management of a KVG must ensure compliance with the rules of conduct and organisational duties - a complex task.

At the centre of this is, for example, the KVG's duty to safeguard interests pursuant to section 26 (1) and (2) no. 2 KAGB in conjunction with Art. 17-20 AIFM Level 2 Regulation, which initially results in institutional autonomy, in particular freedom from instructions vis-à-vis the depositary, but also vis-à-vis an investment committee (which is common in special funds), but which can be significantly restricted by the options for outsourcing management activities to third parties in accordance with section 36 KAGB in conjunction with Art. 75-82 AIFM Level 2 Regulation. As a result, comprehensive professional due diligence obligations must always be observed.

In its limiting function, the duty to safeguard interests requires the prevention and management of conflicts of interest (section 26 (2) no. 3, 27 (1-5) KAGB; articles 30-37 AIFM Level 2 Regulation), not least when receiving financial incentives ("kickbacks"; articles 24, 30 lit. e AIFM Level 2 Regulation; section 2 (1) KaVerOV). The maxim applies: conflict prevention takes precedence over conflict elimination. The prevention of conflicts of interest is ultimately also served by the KVG's obligation to treat all unitholders strictly equally (section 26 (2) no. 6 and (3) KAGB).